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M/s. Anika International Private Ltd., F 402, 4th Floor, Ras Villas,Plot No.D 1, District Centre, Vs. DCIT, Circle 1 (1), New Delhi.
March, 19th 2015
          IN THE INCOME TAX APPELLATE TRIBUNAL
               (DELHI BENCH `A' : NEW DELHI)

          BEFORE SHRI G.C. GUPTA, VICE PRESIDENT
                             and
           SHRI B.C. MEENA, ACCOUNTANT MEMBER

                          ITA No.1571/Del./2013
                      (ASSESSMENT YEAR : 2009-10)

M/s. Anika International Private Ltd.,       vs.     DCIT, Circle 1 (1),
F ­ 402, 4th Floor, Ras Villas,                      New Delhi.
Plot No.D ­ 1, District Centre,
New Delhi ­ 110 017.
      (PAN : AABCA571F)

                          ITA No.2093/Del./2013
                      (ASSESSMENT YEAR : 2009-10)

DCIT, Circle 1 (1),        vs.   M/s. Anika International Private Ltd.,
New Delhi.                       F ­ 402, 4th Floor, Ras Villas,
                                 Plot No.D ­ 1, District Centre,
                                 New Delhi ­ 110 017.
                                               (PAN : AABCA571F)

      (APPELLANT)                                    (RESPONDENT)

                 ASSESSEE BY : Shri Sanjeev Jain, CA
                  REVENUE by : Ms. Y. Kakkar, DR

                      Date of Hearing       :      04.03.2015
                      Date of Pronouncement :      18.03.2015

                                         ORDER

PER G.C. GUPTA, VICE PRESIDENT :

      These cross appeals filed by the assessee and the revenue for the

assessment year 2009-10 are directed against the order of the CIT

(Appeals). These are being disposed off by this consolidated order.
                                      2             ITA No.1571/Del./2013
                                                    ITA No.2093/Del./2013

2.    ITA No.1571/Del./2013

      The grounds of appeal of the assessee are as under :-

      "1. The Learned Commissioner of Income Tax (Appeals) has
      erred in disallowing the depreciation amounting to
      Rs.31,38,477/- out of total depreciation of Rs.2,31,37,540/-.

      2.     The Learned Commissioner of Income Tax (Appeals) has
      erred in holding that the purchase cost includes Price of Land."


      ITA No.2093/Del./2013

      The grounds of appeal of the revenue are as under :-

      "1. Whether the Ld. CIT (A) has erred in law and on facts in
      deleting additions made on account of depreciation claimed on
      land amounting to Rs.27,37,225/- ignoring the fact that ­

      i.    Land is capital asset but not a depreciable asset.

      ii.   The cost of construction can not be higher than what is
            arrived at by the valuation as per municipal authority and
            the difference between the total consideration and the cost
            of construction is directly attributable to the cost of land."


3.    Ld. Counsel for the assessee submitted that assessee has purchased

essentially a commercial flat in a multi-storey building and not the land

and, therefore, the assessee was entitled to depreciation on the whole value

of purchase of the commercial space at Saket for a consideration of

Rs.12.5 crores. He submitted that assessee has acquired only a notional

right in the land, which is merely incidental to the transaction of purchase

of commercial space.        He referred to the Doctrine of Essential
                                     3              ITA No.1571/Del./2013
                                                    ITA No.2093/Del./2013




Consideration regarding Indian Double Taxation Agreements in respect of

his arguments. He submitted that the right of ownership includes right to

possess, use in whatever manner etc., which is absent in this case. He

referred to the decision of Hon'ble Supreme Court in the case of Nawab

Sir Mir Osman Ali Khan (late) vs. Commissioner of Wealth Tax,

Hyderabad - 162 ITR 888 in support of this proposition.

4.    Ld. DR has opposed the submission of the ld. Counsel for the

assessee. She submitted that the Doctrine of Essential Consideration is not

relevant to the issue before the Tribunal. She submitted that the assessee is

the proportionate owner of the land also as mentioned in the relevant

documents. She referred to the copy of allotment letter and sale deed of

commercial space in question, copy of which has been filed in the

compilation filed before the Tribunal wherein, in column 5 of the

description, the "share in plot transferred" has been shown as

"proportionate". She also referred to column 10 of the sale deed wherein

valuation as per circle rate of the land has been shown at Rs.75,50,800/-.

She also referred to the valuation report of the assessee's approved valuer

wherein the proportionate land cost has been worked out by the valuer at

Rs.1,07,56,064/-. She relied on the decision of Hon'ble Allahabad High

Court in the case of Commissioner of Income Tax, Uttar Pradesh vs.

Kailash Motors ­ 82 ITR 253 (All.) and of Delhi Tribunal in DCIT vs.
                                      4             ITA No.1571/Del./2013
                                                    ITA No.2093/Del./2013

Capital Cars (P.) Ltd. - (2008) 114 ITD 286 (Del.) wherein held that the

assessee acquires a part of commercial complex along with undivided

interest in land, the depreciation shall be allowed only on the building part.

She relied on the order of AO and CIT (A).

5.    We have considered the rival submissions and have perused the

order of the AO and CIT (A) and also the copies of various documents

filed in the compilation before us. We find that the assessee has acquired a

commercial space at Saket along with the proportionate undivided interest

in the land. We find that essentially it is a case of purchase of commercial

space and the assessee purchases along with commercial space only

notional right in the land which is very much incidental to the transaction

of purchase of the commercial space. The proportionate undivided interest

in the land is provided in the sale deed only to safeguard the interest of the

intending purchaser in case of some unforeseen circumstance of

demolition of the building itself. However, the issue before us is covered

by the decision of Delhi Tribunal in DCIT vs. Capital Cars (P.) Ltd., cited

supra, wherein held that the assessee was entitled to depreciation on the

amount of building and not on the whole amount paid for acquiring a part

of the commercial complex along with the undivided interest in land. The

facts in this case are similar to the facts of the case of the assessee. The

decision of the coordinate Bench of the Tribunal is binding on us.
                                      5             ITA No.1571/Del./2013
                                                    ITA No.2093/Del./2013




Accordingly, we hold that the assessee is entitled to depreciation on the

amount paid for building and not on the whole amount paid for acquiring

the commercial space along with undivided interest in land. We find that

the assessee's valuer himself has valued the value of proportionate

undivided interest in land at Rs.1,07,56,064/-. Accordingly, we direct that

the assessee is entitled to depreciation on the amount of Rs.11,42,43,936/-

(Rs.12,50,00,000/- minus Rs.1,07,56,064/-)       and shall not be entitled to

depreciation on the value of proportionate undivided interest in the land at

Rs.1,07,56,064/- and the grounds of appeal of the assessee are partly

allowed and that of the revenue are dismissed.

6.      In the result, the appeal of the assessee is partly allowed and the

appeal of the revenue is dismissed.

     Order pronounced in open court on this 18th day of March, 2015.

                  Sd/-
             (B.C. MEENA)                              (G.C. GUPTA)
          ACCOUNTANT MEMBER                           VICE PRESIDENT

Dated the 18th day of March, 2015
TS

Copy forwarded to:
     1.Appellant
     2.Respondent
     3.CIT
     4.CIT(A)-IV, New Delhi.
     5.CIT(ITAT), New Delhi.
                                                             AR, ITAT
                                                           NEW DELHI.

 
 
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